Demand, Supply, and Market Equilibrium (+ Appendix)
Multiple Choice Questions
1. A market:
A. reflects upsloping demand and downsloping supply curves. B. entails the exchange of goods, but not services.
C. is an institution that brings together buyers and sellers. D. always requires face-to-face contact between buyer and seller.
2. Markets, viewed from the perspective of the supply and demand model: A. assume many buyers and many sellers of a standardized product. B. assume market power so that buyers and sellers bargain with one another. C. do not exist in the real-world economy.
D. are approximated by markets in which a single seller determines price.
3. The law of demand states that, other things equal:
A. price and quantity demanded are inversely related.
B. the larger the number of buyers in a market, the lower will be product price. C. price and quantity demanded are directly related.
D. consumers will buy more of a product at high prices than at low prices.
4. Graphically, the market demand curve is:
A. steeper than any individual demand curve that is part of it. B. greater than the sum of the individual demand curves.
C. the horizontal sum of individual demand curves.
D. the vertical sum of individual demand curves.
5. The demand curve shows the relationship between:
A. money income and quantity demanded.
B. price and production costs.
C. price and quantity demanded.
D. consumer tastes and quantity demanded.
6. Economists use the term "demand" to refer to:
A. a particular price-quantity combination on a stable demand curve. B. the total amount spent on a particular commodity over a fixed time period. C. an upsloping line on a graph that relates consumer purchases and product price. D. a schedule of various combinations of market prices and amounts demanded.
7. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is ____. ...